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East Asian Economic Review Vol. 8, No. 1, 2004. pp. 3-33.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2004.8.1.113

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Monetary Cooperation in East Asia: Major Issues and Future Prospects

Author

Jai-Won Ryou

Konkuk University

govjai@konkuk.ac.kr.

Yunjong Wang

SK Research Institute for SUPEX Management

yjwang@sktelecom.co.kr
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

The Asian currency crisis in 1997 and the launch of the euro in 1999 made the possibility and desirability of introducing a regional currency union in East Asia a point of debate. At present, the empirical findings and policy implications of previous studies are mixed. We are still in need of theoretical and empirical studies that capture the salient features of East Asia, and give us reliable recommendations for incentive structures, configurations and policy instruments in monetary cooperation in its various stages. This paper aims to review major conceptual and empirical issues relevant to monetary cooperation in East Asia, including proposals for a regional cooperative framework for exchange rate stability or forming a currency union in the region. East Asian countries have no experience with any type of monetary cooperation and all we have are hypothetical predictions. Nevertheless, East Asian countries may be on the brink of an historical evolution to economic and monetary integration, as Europe was half a century ago. The progressive integration of markets in East Asia has conferred a commonality of economic interest upon the countries in the region. As the economic structures of East Asian countries converge with one another through closer ties of trade, investment and finance, the necessity for monetary cooperation will be more likely to emerge in the future. Monetary cooperation in East Asia will be a long process. East Asian countries should make efforts to build collective institutions in the beginning.

JEL classification: F15, G15, G32, O53

Keywords

Monetary Cooperation, East Asia, Currency Union, Optimum Currency Area

Language

English

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